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Global watchdog pinpoints reasons for SA’s battle to recover State Capture assets, pursue serious cases

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The Financial Action Task Force says while SA has a solid legal framework to fight money laundering and terrorist financing, it has significant shortcomings implementing an effective system, including a failure to pursue serious cases.

File picture: African News Agency (ANA)

Cape Town – The Paris-based Financial Action Task Force (FATF) says while South Africa has a solid legal framework to fight money laundering and terrorist financing, it has significant shortcomings implementing an effective system, including a failure to pursue serious cases.

The 250-page report highlighted that the country’s law enforcement agencies, including the Hawks, do not have the necessary skills, manpower or resources, which impeded their ability to identify and prosecute complex financial cases involving money laundering and terrorism financing, as well as battling to recover assets from ’’State Capture’’ and proceeds that moved to other countries.

This was the FATF’s first report on the country in a decade. It is an independent intergovernmental body that seeks to protect the global financial system from money laundering and terrorist financing.

’’South Africa needs to pursue money laundering and terrorist financing in line with its risk profile, including so-called ’State Capture’, the corruption practices involving businesses and politicians conspiring to influence South Africa’s decision-making process to advance their own interests.

’’It helped generate substantial corruption proceeds and undermined key agencies with roles to combat such activity. Recent initiatives have started to address the situation, including replacing key staff and increasing resources at law enforcement and judicial agencies.

’’The country’s Financial Intelligence Centre effectively produces operational financial intelligence. Law enforcement agencies use this for criminal investigations and to trace assets but lack the skills and resources to proactively investigate money laundering or terrorist financing.

’’While authorities carry out some successful money laundering investigations, the proactive identification and investigation of laundering networks and professional enablers is not really occurring.

’’South African authorities have achieved some good results confiscating criminal proceeds. However, they have struggled to recover assets from ‘State Capture’ and proceeds that moved to other countries,’’ the report said.

’’The widespread use of cash is a high risk for money laundering and terrorist financing, including across borders. Detecting and recovering cash proceeds of crime remains challenging while efforts to prevent false or undeclared cross-border currency movements needs major improvement.

’’South Africa must also make better use of financial intelligence. It needs to proactively work with international partners to detect and seize illicit cash flows. It must improve the availability of beneficial ownership information, improve the application of a risk-based approach by businesses and supervisors and close gaps in sectoral coverage.’’

In July, the Standing Committee on Public Accounts (Scopa) heard that the National Prosecuting Authority’s Investigating Directorate had not undertaken a major corruption prosecution in 10 years, so there is very little experience in fast-tracking corruption prosecutions.

Hawks head General Godfrey Lebeya told Scopa the unit was operating at 47% capacity, with 2 811 vacancies. The Hawks were carrying a caseload of around 20 000 cases as of March 31, Lebeya said.

These cases added up to 76 000 charges, most of which were fraud, corruption, money laundering, infringements of the Public Finance Management Act, and the Municipal Finance Management Act.

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